It’s always important to educate yourself before trying your hands on any kind of investment or investment strategies. and this is very true in the case of stock market trading for beginners as well. If you are a beginner it is always beneficial to learn and know as much as you can about trade marketing before jumping into this big ocean. A beginner’s guide Will give you a starting point and also walk you through The basics of stock marketing. This will boost confidence in you and also help you gain profits and minimize your losses.
Know the basics of the Stock market first:
- A share market or a Stock market are the same terms and can be used interchangeably.
- There is a platform known as a stock exchange where the share of various firms/organizations are listed and traded.
- In India, we have various stock exchange platforms such as the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE), Metropolitan Stock Exchange (MSE), Multi Commodity Exchange (MCX), and National Commodity and Derivatives
- SEBI (Securities and Exchange Board of India) regulates and controls the Indian stock market and has the power to impose regulations to administer its work, build transparency and protect the interest of investors.
- Now once you decide to embark on learning and do the real trading, here are five basic steps that can help you know where and how to start.
Open a Trading account:
I know it’s the obvious step you would know, but you never know if you miss it and then wonder about where you went wrong. It is best to find a good online stock broker and open a stock brokerage account to start with. Even if you have a personal account, it’s always best to keep a professional trading account separate. Get yourself familiar with the account interface and gain benefits of the free trading tools and research offered solely to the clients. Many brokers offer virtual trading services to their clients. If you google it, some sites even offer online broker reviews that can help you find the right broker.
Learn to Read as much as you can:
There is a wealth of knowledge out there and much of it is available for free or at a very cheap price. Be it Financial articles, website tutorials, or stock market books, etc. Right now It’s important to study everything market-wise, including concepts and ideas, and do not narrow down your focus on a single topic. You may feel that certain things aren’t relevant at this time but it will make sense in the longer run.
Trading is a journey that often takes you to a destination you never anticipated at the starting point. Hence studying and reading as much as possible will help you to be on the right path and save you from taking a wrong turn on this journey.
Following are five must-read books that will open your mind to new ideas and concepts about trading:
- Stock Market Wizards by Jack D. Schwager
- The Nature of Risk by Justin Mamus
- Trading for a Living by Dr. Alexander Elder
- Winning on Wall Street by Martin Zweig
- Technical Analysis of Financial Market by John Murphy
Start to read everyday news about the market and its current trend. Follow and keep an eye on the various stocks you wish to invest in. In earlier days it wasn’t so important to regularly monitor the global market, but now due to the rapid growth of electronic trading, the scenario has completely changed and one needs to monitor it every day or else you will miss something very important. You can also read the Wall Street Journal and Bloomberg for better and sophisticated news.
Learn to Analyse:
Technical and Fundamental analysis are two key subjects of thought when it comes to approaching the share markets and yet are at the other extreme ends of the scale. Fundamental analysis helps you evaluate stocks by attempting to gauge their intrinsic value. Here, you can study everything from the overall industry conditions and economy to the financial management and strength of individual companies. Expenses, Earnings, liabilities, and assets, etc. all you can learn and analyze under fundamental analysts. With the help of Technical analysis, you can attempt to find out opportunities by analyzing the statistical trends, such as the behavior of stock’s price and its volume. The core assumption of this analysis is that all established fundamentals are factored into the price, and hence, there is no need to closely monitor them. Technical analysis does not measure the intrinsic value of securities, instead, it uses stock charts to find out trends and patterns that suggest how a particular stock will behave in the future.
Hence it is useful to study the basics of technical and fundamental analysis to gain maximum profits with minimum or zero loss. You can learn how this analysis works and get a hack of it through various courses available online as well as on offline platforms. Learning is the best tool to succeed in trading. Once you gain experience with charts and strategies, you will feel more confident and it will bring you into the magical world of price prediction. This will add one step to be a successful trader.
Once you get a heck of various concepts and strategies, now it’s time to get your feet wet and start trading. But there is still one thing you must do before jumping into the real trading market. Yes, it’s practice. So practice trading as much as needed before starting the real stock market trading. You can practice it the old way with paper and pen or virtual trading.
A good stock market simulator serves as an excellent practice tool. As they say, practice makes a man perfect, it’s true in trading as well. Though as a beginner you must take baby steps and recognize the everyday challenge and address them one by one without rushing into them.
Other ways to learn & practice Trading:
Though experience is the best teacher, don’t ever forget to learn something new each day as you progress in your trading career. It doesn’t matter whether you learn online or in person. You can find many online as well as offline courses available for share market trading for beginners ranging from novice to pro levels. You can even go for the various specialized seminars that are often conducted by a professional trader which can be a valuable input for your trading career. It can also offer meaningful insight into the overall market and various investment strategies. Many of such courses offer practical-based workshops where you can learn and actually use that knowledge in practice, actively take positions, try out entry and exit strategies, and solve many assignments.
You can even learn about various research and analysis carried out by many experts and use them for your trading. You can also try out various new apps available where you can take paid subscriptions for everyday learning. Investors.com and Morningstar are two well-respected sites you can try on.
You can also get a full-time mentor for yourself. Someone who can guide you at each step, evaluate your technique, and offer the best advice. You can find a suitable mentor from any of the online trading schools available on the internet.